After scandals, San Diego makes changes

San Diego Mayor Jerry Sanders has the power to hire and fire top executives for the city’s redevelopment arms under changes aimed at stopping the sort of problems that caused two embarrassing scandals.

The move paves the way for the city to appoint permanent leaders to the Centre City Development Corp. and the Southeastern Economic Development Corp., which have had interim heads since their presidents left in disgrace in 2008.

The City Council amended its operating agreements with both agencies Monday to give city leaders more control. But the changes — which earlier had unanimous support — passed on a 6-2 vote after labor leaders successfully lobbied to include a provision that directs the agencies to focus on providing jobs for “unemployed, underemployed and low-income” workers.

The provision doesn’t require either agency or the city to do anything, according to City Attorney Jan Goldsmith, but it does reflect the city’s intent or purpose.

Councilmen Carl DeMaio and Kevin Faulconer, the only Republicans on the panel, said they couldn’t support the proposal with the labor addition despite their lengthy involvement and support of the overall package.

“A vote that was supposed to bring transparency to government and accountability was hijacked at the eleventh hour ... with very little discussion and vetting,” DeMaio said.

Councilwoman Donna Frye called it a victory for workers who have striven for years to include job creation as a priority for the city’s redevelopment agencies.

“I don’t think anybody has been abused today,” she said. “The working class has been helped.”

Reshaping the two agencies has been one of the city’s most pressing issues since July 2008 when CCDC President Nancy Graham resigned and SEDC President Carolyn Smith was fired.

Graham later pleaded no contest to a misdemeanor charge of failing to disclose her financial interests. The case had to do with her business relationship with the Florida arm of a developer, which had won a $409 million urban-renewal project from CCDC, which shapes city redevelopment efforts downtown. Graham also faces an ethics fine of up to $170,000 over her handling of a separate project where she had business ties.

Smith was fired for giving herself and other staffers bonuses that an auditor later called fraudulent. SEDC oversees redevelopment of seven square miles east of downtown.

The new changes give the mayor the authority to fire or suspend an executive immediately, a decision that can be overturned by the council with a two-thirds vote. It also gives the council power to fire the executive if the mayor takes no action. The mayor and council also have the ability to jettison board members for both agencies.

“They also enable the city to respond swiftly to problems or malfeasance within those agencies something that we know is critically important and lacking in the old agreements,” Sanders said. “Few can forget that when we learned that the head of SEDC was giving herself and a few top staff members huge bonuses. ... The city could do nothing to remove her.”

Other changes include regular performance and financial audits of the agencies and an open-record policy that allows city officials to inspect agency documents. Annual budgets must also be reviewed by the city’s chief financial officer.